Bonds borrowed/collateral pledged trade

In the case of a bonds borrowed/collateral pledged trade the institution lending the bonds does not want or need to receive cash against them, as it is already cash rich and would only have to reinvest any further cash generated. As such this transaction only occurs with special collateral. The dealer borrows the special bonds and pledges securities of similar quality and value (general collateral). The dealer builds in a fee payable to the lending institution as an incentive to do the trade. 

To illustrate a bond borrow/collateral pledged trade, suppose ABC Bank pic wishes to borrow DKK 300 million of the Danish government... 

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